Bond question on small plan with non-qual assets

[pbarrett]

We have several dc plans with fewer than 10 lower paid participants and one key/highly paid owner. The owners (mostly doctors) have rollovers within the plan with non-qualified assets requiring plan bonds and/or audits. Due to the type of non-qual assets (jewelery, artwork), we have found that the bonds are quite expensive. Here is my question- what would be the problem with having each owner simply "tranfer/roll out" their rollover account into a separate qualified plan? I assume they could easily transfer the rollover accounts to an IRA but what about another qualified plan whereby we could just do an EZ for them. The only issue I can think of at this point is that there would be no "recurring deposits" (if the rollover was tranferred to a new ps plan).

Any thoughts or ideas would be appreciated.

[WDIK]

How do you plan on limiting participation to the owner under the new plan (to allow the EZ filing) and still be able to pass coverage?

[maverick]

Coverage and 5500-EZ rules aside, one way to get around the "recurring and substantial" employer contributions requirement for profit sharing plans is to establish a 0% contribution formula MPP. See Chapter 3 of Sal's ERISA outline, pages 3.6 and 3.18.

Problem with rolling to an IRA is IRA's cannot have collectibles as assets.

[actuarysmith]

I assume you are going to limit the ability to "roll" out to employees with at least five years of participation, and possibly who have attained a certain minimum age - otherwise you run afoul of the in-service distribution rules.

[Earl]

isn't there an issue about having collectibles in segregated accounts. 408m

Not sure how that applies to a 1 person plan.